ISTANBUL (Reuters) - Israel and Turkey agreed to deepen cooperation in the energy sector on Thursday, taking a further step towards normalising ties with the first Israeli ministerial visit to Turkey since a breakdown six years ago.

Israeli Energy Minister Yuval Steinitz said he would welcome more involvement by Turkish firms in the Israeli energy sector, particularly in gas exploration, and said "detailed dialogue" between the two governments would begin in the coming months.

After meeting in Istanbul with his Turkish counterpart Berat Albayrak, who is President Tayyip Erdogan's son-in-law, Steinitz said the two had discussed the possibility of building a natural gas pipeline from Israel to Turkey.

"I was a great proponent of the normalization of ties between Israel and Turkey, and the meeting today is the beginning," Steinitz said. "The result, the economic results, should be to the benefit of people of Turkey and Israel."

Relations between the two regional powers crumbled after Israeli marines stormed an aid ship in May 2010 to enforce a naval blockade of the Hamas-run Gaza Strip, killing 10 Turkish activists on board.

But they announced in June that they would normalise ties, a rare rapprochement in the divided Middle East, driven as much by the prospect of lucrative Mediterranean gas deals as by mutual fears over growing security risks.

Speaking in the capital Ankara, Erdogan's spokesman Ibrahim Kalin said the two countries would exchange ambassadors, as agreed in June, in the next week to 10 days.

Israeli officials said the committee meeting to decide on the appointment of the Israeli envoy would not take place until Oct. 27, and that a new ambassador was only likely to be in Ankara towards the end of the year.

HUGE RESERVES

At stake are under-sea natural gas reserves worth hundreds of billions of dollars. To exploit them, Israel will likely require the cooperation of Turkey.

Steinitz said Israel had so far discovered around 900 billion cubic metres (bcm) of natural gas but that next month, Israeli waters would be opened up for exploration and that scientists estimated another 2,200 bcm could be found.

"This is a lot of gas, much more than we can consume," he said. "Exporting gas to our neighbours in the region or to Europe through different pipelines, this is of course very important and of course one of the important options is connecting to Europe through a pipeline to Turkey."

Detailed discussions between the Israeli and Turkish governments would begin in the coming months, he said.

Steinitz also said Israel was open to greater involvement by Turkey, once its only Muslim ally, in supplying power and aid to the Hamas-run Gaza Strip.

"We are careful to keep our security," he said. "But if the Turkish government and companies are involved in improving the life of ordinary people in Gaza ... we will do our best to enable this."